Illinois has a problem with its public pension debt.

A recent analysis by Wirepoints reveals that too little money into pensions hasn’t been the issue. Instead, it’s the dramatic growth in pension benefits promised by politicians that have been bankrupting Illinois.

Promised pension benefits in 2016 were 1,000 percent higher than they were three decades ago. 

Total pension benefits have grown at an annually compounded rate of 8.8 percent over the past three decades. Compared to 1987, benefits have grown 1,061 percent.

By any measure, the pension promises made by Illinois politicians have been extreme and unsustainable.

Those benefits are overwhelming the state’s economy and taxpayers’ ability to pay for them.

 

Here is the original story as reported by Wirepoints:

Illinois state pensions: Overpromised, not underfunded

A dramatic rise in pension benefits – not funding shortfalls – caused Illinois’ state pension crisis

By: Ted Dabrowski and John Klingner

There’s little argument that Illinois politicians are to blame for the state’s massive pension crisis.

However, how politicians caused the crisis has long been misunderstood. Critics on both sides of the aisle typically accuse politicians – and by extension, taxpayers – of shortchanging pensions.

But a Wirepoints analysis reveals that too little money into pensions hasn’t been the issue. Instead, it’s the dramatic growth in pension benefits promised by politicians that’s been bankrupting Illinois.

Wirepoints analyzed Illinois pension and economic data stretching back to 1987 and also compared pension plans across the country from 2003-2015, using data from the Illinois Department of Insurance and Pew Charitable Trusts.

Wirepoints found that pension benefits have grown exponentially over the past 30 years.

Promised pension benefits in 2016 were 1,000 percent higher than they were three decades ago. As the below graphic shows, no other measure of Illinois’ economy comes even remotely close to matching the growth in promised benefits.

Those benefits are overwhelming the state’s economy and taxpayers’ ability to pay for them.

Total pension benefits have grown at an annually compounded rate of 8.8 percent over the past three decades. Compared to 1987, benefits have grown 1,061 percent.

That growth is six times more than total state general revenue growth (236 percent) over the same time period; eight times more than median household income growth (127 percent); and nearly ten times more than inflation (111 percent).

In fact, Illinois’ pension benefits grew faster than in every other state in the nation except New Jersey and New Hampshire between 2003 and 2015, according to Wirepoints’ analysis of Pew data.

By any measure, the pension promises made by Illinois politicians have been extreme and unsustainable.

Wirepoints’ findings also dispel the claim that too little money in the pension plans caused the current crisis – state pension assets, buoyed by taxpayer contributions, have also grown exponentially since 1987.

Pension assets are seven times higher in 2016 than they were 30 years ago. They’ve grown five times more than household incomes over the entire period and nearly six times more than inflation.

And in the 2003-2015 period, Illinois assets grew the seventh-fastest of any state in the nation.

CONTINUE READING…

This story originally appeared on Wirepoints on February 6, 2018, and was written by Ted Dabrowski and John Klingner.

 

The Wall Street Journal rated Illinois public pensions last place out of all 50 states in regards to how much of future pension obligations are funded. Bloomberg Business rated only New Jersey as worse than Illinois.

It can be hard to know how much debt there is when Illinois is using accounting tricks to hide how bad the pension debt really is. We do know it’s bad though. It’s so bad now that every Illinois household can expect to pay more than $56,000 in additional future taxes to pare down that debt.

When property taxes are rising 6X faster than incomes in Illinois, raising taxes to pay for pension obligations will cause even more people to move from Illinois.

It’s time to get serious about reforming state government.